Walgreen, a Dividend Aristocrat, surged to its highest price in history as the company reported May sales that topped estimates. Sales in
comparable stores rose 4.4%, compared with
an estimate of 4.1%. Sales for fiscal Q3 (ended on May 31) increased 6.5% from a year earlier to $19.5B, the company said,
higher than the $19.3B estimate. Comparable same-store sales for Q3 increased
5.1%, while prescriptions filled at comparable stores
gained 4%. WAG operated over 8K drugstores, 120 more than a year earlier. It owns 45% of Zug, Switzerland-based Alliance
Boots, & is considering buying the rest of Europe’s
largest pharmacy chain. Shares may rise if the company
lowers its tax rate by moving the company headquarters in a tax
inversion procedure thru the deal. The stock jumped $3.00 (4%) to $74.56. If you would like to learn more about WAG, click on this link:club.ino.com/trend/analysis/stock/WAG?a_aid=CD3289&a_bid=6ae5b6f7

Walgreen (WAG)

Service providers from construction
companies to retailers expanded in May at the fastest pace in 9 months, signaling a broad-based rebound in the US economy after a dismal Q1. The Institute for Supply Management’s (ISM) non-manufacturing
index climbed to 56.3, the highest reading since Aug, from
55.2 in Apr.
Readings greater than 50 signal expansion. 17 of the 18
industries surveyed showed improvement. The figures, combined with a pickup in manufacturing
reported by ISM earlier this week, point to gains in business & consumer spending that will probably lift growth & spur
employment after the economy shrank in Q1. Service industries also performed well overseas as a report
from the UK showed faster growth than forecast in
May & confidence about the outlook prompted companies to boost
hiring. Today’s ISM data followed a report on Mon that showed
manufacturing expanded in May at the fastest pace of the year as
factories responded to increased orders by cranking up
production. The services survey covers an array of industries
including utilities, retailing, health care & finance that
make up almost 90% of the economy. It also includes
construction, mining & agriculture. The measure of new orders rose to the highest level
since Jan 2011 & the employment gauge also climbed. The
business activity index, which parallels the manufacturing
production gauge, increased to a more than 2-year high. “This is all derived from increased confidence, not just
consumer, but it’s company-related,” Anthony Nieves, chairman
of ISM’s non-manufacturing survey committee, said. “At this level of business
activity and new orders in the pipeline, employment is going to
have to go up.”

The Federal Reserve (FED) said the economy expanded at a modest to moderate pace last month as
auto sales led household spending & the labor market improved. “Consumer spending expanded across almost all districts,” the report said. “Labor
market conditions generally strengthened” with “hiring activity steady
to stronger” in most of the US. 7 of 12 districts saw
“moderate” growth, with the rest characterized as “modest,” the FED said
in its Beige Book business survey, which is based on reports from its
district banks. The survey, released 2 weeks before policy makers meet,
supports Chair Janet Yellen’s view that the economy is rebounding from a
1% contraction in Q1 caused largely by harsh
winter weather. The FED is watching the labor market as it moves
to complete the bond-purchase program late this year & start
considering the timing of the first interest-rate increase since 2006. Growth accelerated in the Cleveland & St. Louis districts & slowed slightly in Kansas City. The
report also said that manufacturing “expanded throughout the nation” & transportation “strengthened in most districts” with ports showing
“brisk growth” along the Southeastern coast.

Midday news was favorable which brought back a few buyers into the market. The MLP index going over 500 to another record is nothing short of eye popping. However, the yield on that index has been reduced to only 5.5%, barely above the 5.37% record low set in 2007 which was followed a substantial sell-off. Of course, in those days the yield on the 10 year Treasury was above 4½%. The latest reports have raised the estimate on new jobs in May to 215K. Today's tepid market rise indicates that nervousness is winning over bullish sentiment.

Dow Jones Industrials

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